A manufacturing organization needs to create value and have a performance that is synchronized with activities that can hit the ROI/ROCE. When thinking about the manufacturing arena, all the plants, factories, and shops lookout for the creation of value through the production of semi-finished or assembled goods. To achieve an everlasting organizational performance, there is a need to have efficient plant completion. Initially, vision and strategy are placed on the counter. After that, the KPI’s are defined, and the performance of an organization is measured based on those KPI’s.
A plant is best described by 4M (Man, Method, Machine, and Material). During Industry 3.0, Plant performance improvements have been significant especially because of the breakthroughs on process excellence like TPM, TQM, SixSigma, Lean/TPS, and TOC. In parallel, the Plant IT stack (CRM, ERP, SCM, EAM, Service Management, etc.,) has grown to ISA 95 Level 4 by Institutionalizing these systems. Unfortunately, after that performance improvement rate is not that high. The systems that are evolved are focussed on 3M (Method, Machine, and Material) and not focussed on Man in the plant. The HRM is focused on Man but more on Onboarding, Offboarding, Leave, Attendance, Payroll, Reimbursement, and Personal performance management along with L&D.
The term Industry 4.0 (digitization) term was coined 10 years ago, but not a lot of manufacturing companies have realized the benefits of the same. The primary objective of this key term is an optimization of the value chain by the leverage of digital data-driven technologies merged with integrated systems. The base is set by communication technology. For Optimization, real-time feedback and action-taking abilities are very important. The optimization is not just focused on improving the plant performance but complete organization performance like TQM (Total Quality Management).
Once the measurement of KPIs is set, the improvement in the efficiency automatically sets in. The majority of plants started off the measurement around KPIs with logbooks and excel sheets. During the planning, from the top management, KPIs are created in Excel sheets and by end of the planning, these KPIs are frozen. There are numerous excel sheets created in this entire process. Once this is done, these excel sheets are then formulated to the lower level of the organization. The problem is bigger than error-prone human efforts.
We live in the VUCA world. Agility is the new mantra that is required. This requires continuous updates to KPIs and effectively a change to the daily work management. Alignment becomes a much more critical aspect. Excel-based KPI systems will certainly slow down the process. The cost of delayed decision-making hampers the performance.
To measure the performance, organizations and plants started implementing Excel-based MIS tools and then they evolved to BI tools like PowerBI, QlikView, TableU. Over time, these systems have been developed to track the KPIs. Though it consolidates the data from various data sources unfortunately this approach has its limitations. Whenever there are abnormalities/anomalies observed, what action has been decided and whether that action has worked to bring the KPI to normality is not tracked. The correlation between KPIs / Causes / Effects is also lost. Most of the important information is in logbooks which can’t be capitalized.
For an instance, if the supplier is not able to furnish the supplies on time, due to certain reasons, the shortage of raw materials will automatically impact the plant productivity/ OE. The product demands and the changes in the daily chores for the organization, will not be measured effectively then. This will lead to a reduction in efficacy. If the information is completely furnished in the system, along with the history, the immediate decisions will optimize the organizational efficacy accordingly.
As part of Industry 4.0, digital transformation, to improve the Plant performance a centralized KPI Management system is quite important. This system can provide visibility, adapting to change which makes employees know what their actions are contributing to. It makes them empowered. Apart from that it can build intelligence and provide insights and actions on the KPI Completeness, cause, and effects correlations, predictability, corrective and preventive actions which improve employees' effectiveness and efficiency thereby empowerment.